Forum Discussion

Shunya's avatar
Shunya
Contributing User
4 years ago

Why my purchase partially allocated to Cost of Sales account in the journal??

Hi, it is my understanding that once a purchase with item code was entered all price for the purchase should be allocated to an asset account (account #1-XXXX) as inventory. That is how we set up our...
  • Steven_M's avatar
    Steven_M
    4 years ago

    Hi Shunya 

     

    Updating the price on a bill after the fact will cause the cost of sales value to show on the Bill when it typically would not show. This caused by the fact that the system re-calculates the average cost for that item and then redraws that cost of sales amount.

     

    Based on my testing, it does look like it works out the appropriate value with the calculation sold being:

    Purchase Cost of Sale amount = (Purchase cost per unit - Average Cost) x Quantity Sold.

     

    Although, long term for that item, updating the bill after selling those items is not something that I would recommend for users. While it is likely and does appear to calculate the desired amount when that item is sold, it may have lasting long-term impacts, especially if the item is being sold in chunks. The recommendation if you have received items without a supplier bill then Help Article: Recording items received without a supplier bill would be the recommendation.

     

Mike_James's avatar
Mike_James
Ultimate Cover User
4 years ago

Hi Shunya , does your purchasing procedure go from purchase order to receive item to bill?

 

And do you sell out received stock before the bill arrives, and your purchase order is not accurately priced?

 

In this situation, Accountright will create cost of sale adjustments for sales made when costs were inaccurate, and unlike v19 when separate inventory adjustments were created, the adjustments are now added to the original purchase journal,  which means that the journal no longer matches the purchase on screen.  The adjustments are also unauditable.

 

Your purchase journal suggests to me that such adjustments have been occurring.

 

If you still wish to use receive items, then the only way to prevent major adjustments is to price your purchase orders accurately.

  • Shunya's avatar
    Shunya
    Contributing User
    4 years ago

    Hi Mike, thank you very much for your reply for my post.

     

    1. We would enter this kind of purchase from Bill rather than from Order or Receive Item.

    2. To save our working time rather than entering purchase every day we would enter this type of purchase with larger amount at a time in a month. Bofore entering the final priced purchase we would also have to enter a tentative purchase with tentative price and then enter a reverse entry.

     

    Do you think the way of entering the purchase as above is causing the issue of inaccurate cost of sales price in the journal? If so what is the best way for us to enter the purchase so MYOB will no longer cause the same issue?

    Should we just enter a purchase every day from Receive Item and then convert to Bill when we received an actual invoice from supplier?

     

    I am sorry to be a pain but if you can answer for me that would be really great.

    • Steven_M's avatar
      Steven_M
      Former Staff
      4 years ago

      Hi Shunya 

       

      Updating the price on a bill after the fact will cause the cost of sales value to show on the Bill when it typically would not show. This caused by the fact that the system re-calculates the average cost for that item and then redraws that cost of sales amount.

       

      Based on my testing, it does look like it works out the appropriate value with the calculation sold being:

      Purchase Cost of Sale amount = (Purchase cost per unit - Average Cost) x Quantity Sold.

       

      Although, long term for that item, updating the bill after selling those items is not something that I would recommend for users. While it is likely and does appear to calculate the desired amount when that item is sold, it may have lasting long-term impacts, especially if the item is being sold in chunks. The recommendation if you have received items without a supplier bill then Help Article: Recording items received without a supplier bill would be the recommendation.

       

      • Shunya's avatar
        Shunya
        Contributing User
        4 years ago

        Thank you very much, Steven!!

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